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Strategic Uncertainty in Economic Environments

Objective

This proposal concerns two sets of projects that tackle theoretical challenges raised by the data broker and online advertisement industry.
1-Strategic Uncertainty (SU) in Economic Environments: By assuming that individuals have correct beliefs about others' behavior, the equilibrium approach in economics assumes away SU. But SU is central to many settings. Testament to this is the existence of a data broker industry, in which data on agents' behavior are traded: this information would have no value without SU. Within game theory, non-equilibrium concepts such as rationalizability and models of level-k reasoning have been developed to study SU. But these models have had a limited impact on broader economics. This is partly due to the weakness and limited tractability of these concepts. Part 1 tackles SU in order to favor a better integration within economics. From a behavioral perspective, I propose axiomatic foundations that justify modeling individuals' reasoning as stemming from a cost-benefit analysis, and investigate (theoretically and experimentally) how these ideas shed light on the occurrence of equilibrium coordination under SU, i.e. as the result of purely subjective reasoning. From a classical perspective, I develop uniqueness and monotone comparative statics results for non-equilibrium concepts, to favor a better integration of SU in standard economics. Applications include problems of information disclosure of strategic datasets and identification in models of social interactions.
2-Online Auctions with Digital Marketing Agencies (DMA): I study the role of DMA in the auctions used to sell advertisement space on the web. I analyze how collusive bidding can emerge from bid delegation to a common DMA and how this undermines both revenues and efficiency of the auctions used by key players in the industry such as Facebook, Google and Microsoft-Yahoo!. Implications and extensions include business, policy and economics methodology.

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Keywords

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Programme(s)

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Topic(s)

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Funding Scheme

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ERC-STG - Starting Grant

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Call for proposal

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(opens in new window) ERC-2017-STG

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Host institution

UNIVERSIDAD POMPEU FABRA
Net EU contribution

Net EU financial contribution. The sum of money that the participant receives, deducted by the EU contribution to its linked third party. It considers the distribution of the EU financial contribution between direct beneficiaries of the project and other types of participants, like third-party participants.

€ 1 480 325,00
Address
PLACA DE LA MERCE, 10-12
08002 Barcelona
Spain

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Region
Este Cataluña Barcelona
Activity type
Higher or Secondary Education Establishments
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Total cost

The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.

€ 1 480 325,00

Beneficiaries (1)

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